Don't use special levies for routine work

PAUL GUPPY, GUEST COLUMNIST

Published 10:00 pm, Monday, October 23, 2006

The mayor and the Seattle City Council have sent to voters the largest property tax levy in city history, $365 million over nine years, to start paying for repair of public streets and other services. The levy, along with two other new taxes, will fund half of projected street maintenance needs by 2015.

The two other taxes are: 1) a permanent $25-a-year head tax on workers "for the act or privilege of engaging in business activities within the City," whether or not the company they work for is located in Seattle, and; 2) a permanent, phased-in 10 percent tax on commercial parking, making Seattle, especially downtown, a less attractive place to live, work or shop. The city is applying the head tax to its own 10,700 workers, adding $267,500 a year to payroll costs.

The taxes on workers and parking already have been enacted by the City Council and signed by the mayor. The property tax levy requires voter approval and is phase one of a larger, $1.6 billion plan. The mayor promises to "come back to the voters in nine years to finish the job."

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The levy proposal raises two important questions, which are analyzed in a recent Washington Policy Center report: How did Seattle get in this predicament in the first place, and how does the street tax fit with what Seattle residents already are paying for public services?

City officials say lower car tabs and reduced state funding explain why the streets are in bad shape -- as the mayor puts it, "we're in a bit of a fix" on street repair. But total revenues to the city have been growing. Taxes in Seattle are higher than ever before, and the city's general fund, adjusted for inflation, has more than doubled since 1980. Over the years, the increased revenue was used for other programs, while basic road upkeep was neglected.

Special levies often are viewed in isolation, but the cumulative effect on Seattle families is enormous. To get an accurate picture, the street repair levy must be viewed in light of how past, present and future taxes stack up.

Seattle citizens recently paid $110 million for the failed Seattle Popular Monorail. The first phase of Sound Transit is $4.7 billion, or about $143 per person per year. In 2000, King County increased the sales tax to raise $80 million more for Metro buses.

Seattle residents are also paying to support 16 county and municipal bonds and special levies, totaling roughly $1.4 billion. Some of those levies last until 2022. In addition, every year Seattle officials impose the maximum regular property tax increase allowed by law.

Higher regular taxes could be coming. In June, a judge struck down the 1 percent limit on regular property tax increases, which, if upheld, clears the way for Seattle to impose 6 percent increases every year, as was routine before the limit passed.

Other high-dollar projects include: $4.6 billion to put the Alaskan Way Viaduct in a tunnel; $7.2 billion for the Regional Transportation Investment District; new taxes for Sound Transit; and $1 billion for phase two of the street repair plan.

The property tax on an average home valued at $400,000 is $3,848 in 2006. The street repair levy would add $155 to that total in the first year.

Most people agree that elected officials should not ask voters to pay extra for basic services. For elected officials, though, the temptation to do so is tremendous. If voters are told they will lose the service if they do not vote for a levy, people feel they must renew the levy again and again. Funding basic services with special levies makes voters feel they must either agree to pay higher taxes or do without a vital service. Yet each new tax lowers the take-home pay of Seattle residents.

The practice creates a pattern: Low priority services are funded through the regular budget, while high priority services are left unfunded. Public officials then call for more money through special levies. When voters say yes, it encourages officials to shift more core functions to special levy funding, thus freeing up the regular budget for spending on other programs.

Most people see maintaining public streets and bridges as a core function of government. Passage of the $365 million levy will continue the trend of using special levies to pay for routine public work. If it fails, Seattle's leaders will likely re-examine budget priorities to see if basic street repair can be addressed with the tax money citizens are already providing.